Mark My Word

Interesting events in the markets today. The Ukrainian crisis remains at the forefront of financial market news as markets seems to take direction with any update on the current situation. Overnight, Russia’s Putin stated that he saw no imminent need to invade Ukraine for the time being whilst not excluding the possibility of using force. The US Senate is meanwhile mulling imposing sanctions on Russia by means of a bill which is yet to be approved this week, whilst Sweden has also stated that they are reconsidering its relations with Russia. As events unfold, more countries in and outside the G8 are pondering the viability of their existing bilateral trade and financial agreements with Russia, however, many governments remain intent on not shooting themselves in the foot here, given their dependence on foreign trade and investment with Russia. The Russian Ruble recovered strongly yesterday, however the path to a more serene market environment could be delayed if the agreement to impose sanctions is widespread.

Risky assets have not waited for additional market news to take their stance as the S&P reach an all-time high during last night’s trading session. The key here now remains to focus, at least momentarily, on the economic agenda and central bank meetings. On the economic data front, the US ADP employment report and ISM manufacturing index are to be released today whilst the US Federal Reserve will publish its Beige Book of economic conditions tonight.

In the Eurozone, the second estimate of Q4 GDP data is not expected to surprise the markets and deviate from the preliminary 0.3% q-oq release. Meanwhile, the final euro area composite PMI is forecast to be revised slightly downwards, with the impact expected to be minimal ahead of tomorrow’s ECB rate setting meeting. The chances of non-sterilisation of SMP bond holdings has been widely discussed of late, resulting in a slight strengthening of the EUR/USD currency pair over the past couple of days.

In EM, Venezuela’s Maduro yesterday tweeted out that the country had secured financing with China and Russia, the details of which are yet to be made public. This provided support for Venezuelan bonds during yesterday’s trading session follow a series of weeks of nothing but volatility in bond prices.

Key economic data today

EUR PMI

EUR Q4 GDP

UK PMI

US ISM non-manufacutirng

US ADP employment

US Beige Book

Have a nice day!

Mark Vella

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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